Tech Bubble Burst 2022
What it means, why it happened and what's it in for engineers
“There’s never been a better time to be a Software Engineer than now”.
A pretty common phrase we all have been hearing since the COVID pandemic started. And if you think about it, this phrase actually makes a lot of sense. Since the pandemic began the software industry has seen an incredible boom in the number of Startups being launched, the amount of money that is being invested, the number of companies becoming unicorns and the exponential growth of alt coins and the crypto market.
But lately the trajectory of the software industry has changed, the tech bubble that has been there since the last decade has started to pop and it begs the question “how is it going to affect my career as a Software Engineer and are we in the endgame?”
So for people who haven’t been following tech news regularly for the last couple of weeks or so, the tech industry has been on a downhill path and this is probably the biggest recession we have seen in tech since the dot-com crash.
What does the "Tech Bubble burst" exactly means?
Well, the tech bubble burst simply means that a large number of people bought shares of companies that were relatively new in the market or companies that weren’t generating a net profit, and paid more than what the shares were actually worth. When it became clear that the shares were worth less than what people paid for them, the bubble burst and the market or the shares of these companies came crashing down.
What exactly has been going on in the tech industry?
Well it’s a time filled with uncertainty, tech employees are being laid off. Companies like Robinhood, Google Cloud, Ford, Better.com, Unacademy, Baidu, Tesco, Nestle have laid off a large percentage of their employees due to the bubble burst and market crash, Meta has officially announced that they are on a hiring freeze right now. Even IT companies are set to slash over 3 million jobs in 2022 and as per records unemployment especially in tech soars up to 15%!!!
The market is absolutely murdering tech stocks this year. Alphabet, Amazon, Apple, Meta and Microsoft are down 19%, 31%, 13%, 38% and 17% respectively as of May 9, 2022. Netflix has dropped to over 65% in 2022, Shopify has been down 70%, and Lyft lost nearly a third of its value in the last week . Tech giants have lost more than $1 trillion in value over the last week or so. VCs are more careful than ever before regarding who they are giving their money to and it’s been a difficult time for startups to raise crazy amounts of money at even crazier valuations.
As for the crypto market, the hype around alt coins and NFTs is slowly dying and the dip keeps dipping. The global crypto market cap has now shrunk to $1.41 trillion, decreasing by 7.94% in the last 24 hours, according to CoinMarketCap data on Tuesday. Almost every top 10 crypto prices have come down in the last 24 hours.
So are we engineers in the endgame?
With all that you just read you must be wondering, well is time’s up for engineers, should I stop learning development and go be a farmer? Will people stop treating us like kings and queens like they have been doing so the last decade or so?
Well the answer for these questions is NO!! No, we engineers are not at risk, and the first statement, “There’s never been a better time to be a Software Engineer than now” still holds true. Yes there have been large scale layoffs, yes the tech stocks are crashing and yes VCs are on a backfoot when it comes to funding startups, but you have to understand why all of this is happening in the first place.
All the companies that been laying off engineers or all of the companies that have seen their share prices going down are mostly companies that have been overvalued and that haven’t been generating generating a net ‘profit’, and startups that are having a hard time getting new rounds of funding are startups that have hired a ton of engineers which was not required and have been burning through cash basically.
Even among these layoffs Amazon has announced that they will be aggressively hiring in 2022 and there are a lot of companies and startups that are actually profitable and haven’t been affected by the tech bubble burst.
If nothing, the last few months have given us a clearer picture of what exactly is happening in companies and what are the places that you should be aware of before joining them. And most importantly the downhill trajectory won’t be for long, things will be back to normal and engineers who had to go through these tough times will be back on their feet building great software and products that will actually make the world a better place.
“Tough times don’t last, tough people do.”
Thank you all for reading, would love to hear your feedback on this.